ALABAMA
A L A B A M A I N D E P E N D E N T A U T O M O B I L E D E A L E R S A S S O C I AT I O N F E B R U A R Y / M A R C H 2 0 17 S TAT E A F F I L I AT E
RIGHT-NOW ACTIONS to Improve Your Online Reputation
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V I S I T U S AT W W W. A L A B A M A I A D A .O R G
INSIDE
WELCOME NEW MEMBERS
04........................................................... The American Dream 08.......................................... Improve Your Online Reputation 10.............................................. When Good Recon Goes Bad 12.......................................................Growing Need for BHPH 14.................................FTC Changes Used Car Buyer’s Guide 16...................U.S. Proposes V2V Mandate to Avert Crashes 19.................................Embracing the #Hashtag Generation
Harmon Lisenby
Matthew King
Scott Grantland
Jonathan Brown
James Stokes
Michael Graydon
WHAT’S NEW
Tarryl Moody
Donna Kolb
Shirlee Scott
Brian Barton
Roggi Garcia
A & H Auto Alabaster
Clement Motor Company Homewood
ASF Motors Hueytown
Coastal Automotive LLC Bay Minette
Automotive Excellence Daphne Detail LLC Pleasant Grove Daphne
CMD Dates Announced
Class dates for NIADA’s industry leading Certified Master Dealer program have been announced for the upcoming year! Look for a class coming to your area! Dates include Feb. 9-11 in Portland, Ore.; May 15-17 in Atlanta; Sept. 12-14 in Dallas; and Dec. 11-13 in Tampa, Fla. Visit www. niada.com or contact Diann Flanders at 888-906-8283 or diann@niada.com for more information.
ADVERTISER’S INDEX
Ace Motor Acceptance.......................................................... 7 ARA GPS.................................................................................. 3 AutoZone............................................................................... 18 Black Book............................................................................ IBC BMW Group Direct...................................................................9 CarMax Auctions................................................................... 22 DAA Dealers Auto Auction Group, LLC ..................................5 Manheim ................................................................................11 Manheim Pennsylvania..........................................................13 NextGear Capital...................................................................IFC NIADA CPO ............................................................................15 Spireon ...................................................................................19 STARS GPS ............................................................................16 VAuto....................................................................... Back Cover
OFFICE
BB Wholesale Auto LLC Muscle Shoals
Devante Braxton
Nick Starnes
Braxton Automotive Birmingham
Lisa Bundy
CarGirl Jacksonville, FL
DriveOne Automotive Bessemer
Camille/Don Thomas East Limestone Autoplex Inc. Athens
Just Lookin Auto LLC Moulton
Graydon Motors Trussville
Allen & Anna McConathy
Family Legacy LLC dba Honorable Used Auto Sales Montgomery
Mac Auto & Collision Inc. Hueytown
Douglas M. Melton Melton Automotive Alabaster
Jeremiah Mote
Jeremiah Mote DBA CM Auto Sales Jasper
Mary Powers
Powers Used Car Sales Atmore
Joe Scott
Derwin Perry
Joe Scott Motor Co Montgomery
The Car Guys Millbrook
Barry Searcy
Larry Morris
Lester Avery
President
John Dunn
Reed Ingram
Joe Smith
Lance Turner
Kelly Steely
Chris Mundy
Willie Colvin
Darrell Pettie
Randy Sheffield
Bryan Cooper
Jerry Giles
Chris Hadder
Ethan Hunt
Wayne Wilkinson
Chris Mullinax
Tim Duke
Roderick Underwood Ricky Young
Jay Saul
Randy Little
Randy Crump
Erek Yarbrough
Pokey Brimer Oxford
President Elect
Chad Tillery Jemison
Secretary/ Treasurer Robbie Case Hartselle
Chairman of Board
Rex Canterbury Fayette
Muscle Shoals Sylacauga Anniston
Tuscaloosa Huntsville Mobile
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 The Alabama Independent Automobile Dealers Association is published bimonthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the authors and do not necessarily represent the views of AIADA or NIADA. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2017 by NIADA Services, Inc.
Leisha Inman
DIRECTORS
Vice President
NIADA HEADQUARTERS
Joiner Auto Sales Dothan
EXECUTIVE COMMITTEE Todd Oden Birmingham
120 Vulcan Road Birmingham, AL 35209 Phone: (205) 942-1000 Fax: (205) 942-3565 Website: www.alabamaiada.com To become a member of AIADA, please call (800) 239-2423
Dealership Capital Partners Macon, GA
Julian Joiner
Grantland Motors Rainbow City
Birmingham Jasper Jasper
Birmingham
Montgomery Hoover
Oxford
Montgomery Chelsea
Pleasant Grove Tuscaloosa
Thomasville Jasper
Florence
Bessemer
Hoover Boaz
Satsuma
Pleasant Grove
STATE MAGAZINE MGR./SALES
Troy Graff • troy@niada.com EDITORS
Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT
Christy Haynes • christy@niada.com PRINTING
Nieman Printing
www.alabamaiada.org
February/March 2017 AIADA
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INDUSTRY PERSPECTIVE BY RANDY JONES
THE AMERICAN DREAM From the Executive Director
I was looking back to what some called the financial crisis or recession of 2007. I think the best way to explain what it was like then, and what I believe 2017 is going to be in comparison, is to use an example of a forest fire (just go along with me, it will come together in minute). We’ll take the aftermath of a forest fire and compare it to business following the crisis in 2007. Most the trees supporting plants and animals are gone or going away. The trees that survived are not growing, and, in some cases, they are looking worse day by day. They are waiting on rain, sunshine and better weather. They keep waiting. Nothing seems to be happening to kick off growth in the forest. Some of the large trees are now falling. Growth has come to a standstill, and life has become a fight just to survive. Over the next few years others fall to what one might call “the times we are in.” Now, we will move time up today, and we start to notice a small change. Sometimes it’s hard to see, but you can feel the change in the air. The next years will be known as “The Trump Years” or “The Trump Era.” All the factors of business are coming together – the entrepreneurial spirit will be popping up just like plants with lots of water and good soil, looking up toward the sun. Now is the time to get ready to take your business to the next level, while President Trump is getting the economy back on track, with more people going back to work and making more money. Everyone will be looking for their own American dream. We as independent automotive dealers are in what I would like to call “a perfect storm.” As the economic conditions grow, the consumer will need better transportation to get back and forth to work, and enjoy the fruits of their labor. As a dealer, we will play a key role in this growth by providing good sound vehicles to fill the needs of America.
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Being ready… Your association is working to bring you, the dealers of Alabama, the best of the best in vendors – the ones who are looking out for your best interest. We believe we have achieved this. First, with some of the best auctions in the nation. They bring you more and more vehicles to one location so you can choose the right vehicles that work best in your market. They are always working to keep the best sellers in Alabama, and blocking the bad sellers that could hurt our dealers. You can see a list of these auctions on AlabamaIADA.org. These auctions have more benefits as they give you money back when you buy a vehicle. You can get thousands back over one year. The next step is having some strong floor plan companies for you to choose from. These companies are looking for the dealer who will go the extra mile to get the vehicles ready for sale, and build a customer base to move these vehicles into the marketplace quickly. They want you to sell vehicles each week and come back to the auctions and get more. You will need some great finance companies! You need them to get your customer financed quickly from the comfort of your lot. You want good rates and monthly terms to fit your customers’ needs. We have these lenders for you. I think we have the best lenders, bar none, than any other state in the nation. AIADA is putting classes on every month, some online and some in person, to help teach you more ways to get your vehicles in front of more potential customers. We will keep you on top of social media and other new, more effective advertising. Bringing this all together is a team effort. Your AIADA vendors support you! They help pay for all the education to help you make more money. They want you to grow and become a huge success. You may ask yourself, “How important is education?” Will Durant, great American writer and philosopher, once said, “Education is the transmission of civilization.” Throughout history it is noted the importance of education as it applies to society, including its economic growth. A nation’s brilliance and ability to prosper is directly dependent upon its people’s willingness to change their business
models as the times change around them. Without continuing to open one’s mind and allowing oneself to be taught, a person becomes stagnant and frozen in time. Local studies have shown that economic factors are greatly attributed to the country’s value of educational opportunities. America, as a nation, supports the imperative role that education plays in the continued growth of prosperity for its citizens as well as future generations. The automotive industry has changed and is changing. The way we do business now is not the same as a few years back. The Importance of Education Here are some thoughts from Forbes and other investment talk radio in the 90s and early 2000. It was not that long ago when companies we take for granted started out. Look at what some of the “so called experts” said. • Amazon, started July 1994: “They will never make it – With no brick and mortar store for the customers to shop, it will never work. Only a fool thinks this will be successful.” • eBay, started September 1995: It was said to be a trend, some said wait five years and you can buy that company for a dime. • Google, started September 1998: “AOL and Netscape have too much of the market – no room for anyone else.” (Take a long look at this. Google is a web browser. When they came on the market AOL and Netscape had owned the market share for years, yet Google beat them at their own game.) This is the one we need to learn from – they gave the public what they wanted, only I am not sure at the time we knew what we really wanted.
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• iTunes, introduced January 2001: It was said to be another stupid idea by Steve Jobs – “People will always buy CDs, this new way of selling music will never catch on.” • Facebook, started February 2004: It was called a kid’s fad. The big guys never considered them a real company. It was said this one was going nowhere. If we could go back in time, knowing what
we know now, we wouldn’t need to read the rest of this article. We could have invested in one of these four companies listed above or one of the hundreds of other companies that took some of the old ways and converted them to make a fortune. All our customers need a vehicle, but they are not reading as many newspapers or listening to radio ads, and they skip as many as possible TV ads. We do this also – I fast forward through ads on my TV/DVR and I’m sure you do as well. Are you still doing business like it was done 20 years ago? Put the vehicles on the lot, hoping someone sees it and pulls in for a test drive? Most of us use a website, and when you start looking at them, they all look about the same.
Our vendors go the extra mile. They gladly pay sponsorships to help keep your cost down on education. They are making an investment in you and your business. A lot of people think they have the magic answer, but they don’t. The real answer is studying the new business models, taking parts and pieces to make one that works for you. Put these into practice and treat your business like a business – make sure it is preforming at 100 percent of its ability. Only you can do this. It’s not going to be easy, but being the top in any industry never is. Your rewards will be noticed by everyone, and most of all by you! Your association (AIADA) stays on the road, going to many different events and bringing back some of the top educators in the nation. We will never stop pushing forward to give you the best the world has to offer. This article is to help get you thinking. It’s like that old saying, “Sometimes we can’t see the forest for the trees.” I look forward to seeing you soon at one of our local chapter meeting and at some of our education programs put on by our vendors. With your help, we can make Alabama the best state in the nation to buy your next used vehicle! Never be satisfied with your business, but learn to love what you were bred to do! Randy Jones is the executive director for Alabama Independent Automobile Dealers Association. He can be reached at 205.942.1000.
MANAGEMENT MATTERS BY CHRIS KAHRS
BUILDING YOUR BENCH STRENGTH
Create Future Leaders Ready to Step In
Addressing personnel changes and challenges can occasion lengthy conversations. I’d say that the most often asked question is, “Where do I find my next manager?” As dealerships continue to experience rapid turnover and acquisitions – and promote good employees into management – many organizations struggle to find replacements for vacancies. Prepare for the unavoidable. It’s generally when they’ve lost an employee that dealers realize they have no one in their organization to assume that
particular role. Dealers are forced to search outside their organizations for a candidate who shares their business’ values, culture, work ethic and vision. This hunt can be exhaustive, and the process is disruptive to the daily operations of the organization. Why your team is critical. To use a sports analogy, each team has its starters suited up and ready to go for each game. When one of those starters gets hurt, a “bench player” is the next man up to assume that role. That bench player has been preparing for a scenario like this and is ready to perform. Yet in a lot of automotive organizations, there isn’t a bench player who has been coached to assume the role of the starter should there be the need. How to create a strong bench. Weak bench strength is a problem for a number of reasons. First, it means you must spend time and money to find an outside replacement. And, more important, that unnoticed bench player is likely to leave. I honestly believe one the greatest threats to
your dealership is for an overlooked bench player – one who is not being groomed for advancement – to leave. And they will. Sensing the lack of opportunity, individuals like this will typically depart for greener pastures should they have the opportunity, thus leaving your organization searching for yet another replacement. Here are my suggestions to improve your bench strength: • Train and educate from the top down to develop future organizational leaders. • Cross train for diversity. • Create peer-leader relationships. • Create a career path with clear and defined advancement opportunities. • Train, coach, motivate and encourage personal development. Filing managerial vacancies can be challenging for many organizations. However, you may already have an individual eager and ready to perform if given the opportunity. By building your bench, you can create future leaders from within your organization. Work on developing one to strengthen your overall talent pool. Chris Kahrs brings more than 17 years of experience to NCM, with extensive expertise in multi-facility management and dealer operations. This article originally appeared on NCM’s Up to Speed blog (blog. ncminstitute.com) and is reprinted with permission.
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www.alabamaiada.org
Make it easy for your happy customers to write reviews. Implement a proactive, automated process with the help of online reputation management software like Grade.us SOCIAL MEDIA BY KATHI KRUSE
RIGHT-NOW ACTIONS TO IMPROVE YOUR ONLINE REPUTATION It Pays Off
Online ratings are what brought me to digital marketing. It was 2008 and I could see the 4-way intersection of social media, online ratings, customer experience and dealership operations becoming the foundation to build a modern business. Online ratings are one of the first places people go when they’re looking for solid, trustworthy advice, so staying informed on the latest ways to improve your online reputation could actually increase business. I’ve stayed in touch with a lot of my colleagues from my days managing car dealerships. Back in 2008, one of my friends had moved to a BMW store in Orange County and I became a customer. One day after picking up my car from service, I decided to post a Yelp review. I discovered the dealership had a rating of 1.5 stars. Surprised (because I knew this dealer was a good operator and the store had high CSI ratings through the manufacturer), I decided to do a “mini market study” on my couch. There were 50 or so BMW stores in California at the time and, shockingly, I found all but about four had less than two stars on Yelp. I saw an opportunity to leverage my years of auto retail experience and bring value to companies who needed guidance with social media marketing. Now, social media and online reputation have merged. In fact, SEO, content marketing and social advertising all work together to provide dealers with lucrative ways to attract, engage and sell to their target customers. I’m a natural networker. Word of mouth referrals have always been my go-to source for finding trusted sellers, and online
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ratings sites are where most people turn today. • 90 percent of consumers read online reviews. • 88 percent trust online reviews as much as personal recommendations. • 86 percent will hesitate to purchase from a business that has negative reviews. • Customers are likely to spend 31 percent more with a business that has positive reviews. • 92 percent will use a local business if it has at least a 4-star rating. Reviews are Insanely Influential We live in what Forrester Research has dubbed “The Age of the Customer.” Empowered customers are more demanding than ever, and they have the ability to make or break your business. They don’t trust what you say about your product or service, and they really don’t trust your ads. Instead, they trust other people like themselves. I’ve seen numerous car dealerships that have over 400 reviews and a 2-star rating. To me, this would constitute a call to 911. When you’ve got a large amount of reviews and your overall reputation reads negative, that’s a consensus... not just the opinions of a few unhappy customers. Myth: My Reputation Can Take Care of Itself Online ratings and reviews have the potential to be the single most effective and rewarding marketing channel for small and local businesses, and yet most marketers and business owners do very little to foster and shape reviews because they assume it’s out of their hands. They take a wait-and-see approach – forever. RIGHT-NOW ACTIONS TO IMPROVE YOUR ONLINE REPUTATION Improving, protecting, and promoting the company’s online reputation should become part of daily operations. Negative reviews deter buyers. If you have even one negative review, it’s impossible to gauge how many sales you lost because of it. Use the following eight actions to improve your online reputation and give your store every chance to reach its revenue goals. Remove the obstacles that stymie reviews. Ninety percent of consumers read online reviews. Six percent write them.
Happy customers don’t often write reviews. They’ll say they forgot to, never thought to do so, got too busy or that it’s just too difficult. Make it easy for your happy customers to write reviews. Implement a proactive, automated process with the help of online reputation management software like Grade. us. This not only makes reviewing your business easy, it simplifies the tasks required within daily operations. Earn the privilege of a positive review. Every customer is looking for a “guide.” One of the most important things a guide does in a customer’s life is participate in their transformation. They help the customer become somebody better than they used to be. Rather than sell them products, you actually position your products as tools they can use to win the day. Positive reviews are a natural extension of your customer’s transformation. Respond to every review honestly, openly and with enthusiasm. Responding to online reviews is an art form. Positive reviews deserve acknowledgement. Respond to each one with a sincere note of thanks. If you’re familiar with the transaction or can do some behind-thescenes research, mention a detail the customer will remember. Everyone likes to feel important. When someone writes something negative about your business, it’s easy to become reactionary. Cooler heads always prevail so stand back, take a deep breath and give yourself time to regroup. Be open, honest and conciliatory. Be humble and offer to do whatever you can to solve the problem. Recognize that online reviews are a company asset. Happiness and enthusiasm about your company is a valuable advantage. A flock of glowing reviews greases the gears of search engines to greatly increase your authority in local search. Combined with the powerful word-ofmouth effect, positive online reviews deserve a place on your company’s balance sheet. After all, if you’ve put in the time and effort to improve your online reputation, positive reviews are worth their weight in gold.
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CONTINUED FROM PAGE 8 Acknowledge that software can help but it’s not a replacement for hard work. There are providers who promise to “manage your online reputation” but let’s get the facts straight. No one truly manages your company’s reputation but you and your staff. Software automates your process but that’s only if you have a process to begin with. Within your company are the seeds from which a stellar reputation blooms. Sustain your process by creating a review funnel, invite customers to provide feedback and recover unhappy customers before they vent online. Engage employees in your process. Customers are Googling salespeople. Reviews equate to online authority and when employees are mentioned it increases their value to the customer and the company. Trustworthy employees make the company appear trustworthy. When employees see their names in online reviews, it’s very powerful. Use this as a leverage point to engage them in the review process. Improve your sales process to build online reputation: • Establish WIIFM (what’s in it for me). • Inspire. • Motivate. • Recognize. • Incentivize. • Reward.
Craft the right message when inviting reviews. One of the benefits of using software to support your efforts to improve your online reputation is that it guides the customer through the review funnel with a simple choice of either, “I had a good experience” or “I had a bad experience.” If they choose “I had a good experience,” here are two examples of the right way to ask for a review: • “Our business is based on referrals and we’d really appreciate you sharing your experience with others online.” • “Thank you for the awesome opportunity to serve you. We’d love to hear about your experience and no doubt, others would too.” If they’ve chosen the “I had a bad experience,” they will click over to a landing page that helps recover unhappy customers before they vent online. Here’s an example of the right message for this scenario: • “Thank you for alerting us to your bad experience. We don’t like bad experiences either. Please allow us make things right. We’ll contact you within 24 hours (often sooner) to find a solution that works for you! (and humbly ask how we could’ve done better).” Offer an incentive to engage. I don’t mean to suggest that you ever offer an incentive in exchange for a positive
review, a practice that is not only unethical, but violates the terms of service on many review sites… and may lead to FTC fines, getting banned, named and/or publicly shamed. However, you might offer a no-strings incentive to get customers a step further into your review funnel. For example, Grade.us clients can attach an offer to the landing page they drive customers to for feedback (NOTE: I’m not a paid endorser of Grade.us. There are other similar solutions available). The no-strings offer is simply a way of getting more people to the landing page. The offer – maybe a discount coupon or a free download – is available to anyone, whether or not they post a review. But making the offer available there, on a page otherwise designed to guide customers through the process of submitting a review, increases the odds of getting that review. Next Steps... The data shows taking the necessary steps to improve your online reputation pays off. Reviews are insanely influential. If you find you’re still not comfortable with rolling out an internal process to capture your happy, loyal customers’ feedback, contact me and I’ll be your Sherpa. Kathi Kruse is an automotive social media marketing expert, blogger, consultant, author, speaker and founder of Kruse Control Inc. Kruse Control coaches, trains & delivers webinars focused on integrating social media and online reputation management into dealership operations.
ACCELERATE
BY GWC WARRANTY
WHEN GOOD RECON GOES BAD Solve Your Recon Woes
Few things can be more of a headache for used car dealers than the reconditioning process. Far too often, it can lead to delays, forfeited front-end gross, poor relationships within your dealership and other consequences that ultimately hurt the overall bottom line. It sounds simple enough: Acquire vehicle. Prepare vehicle. Sell vehicle. So how can something so simple cause so many problems? It’s when good recon goes bad. You can solve your recon woes, however, by making small tweaks to your dealership that will have a tangible payout at the end. It’s all about culture. Too many times you hear stories of the back and forth between those acquiring the inventory and those getting it ready to go on the lot. Good recon starts when everyone stops pointing fingers. Cultivate a culture of collaboration. If you’re acquiring inventory, ask your service team what you should look for in a vehicle at
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auction. If you’re getting a vehicle frontline ready, ask about deadlines and find out why a specific turn time is so important. Don’t get overconfident. If you’re estimating how long it will take to recondition a vehicle, be honest with yourself. Time is money, and you can’t accurately appraise and price your vehicle if you’re building in five days of holding costs when it will really take 10. Having a trusting and cooperative culture will help everyone feel comfortable enough to be transparent with these types of details. Know the dollars and cents. It’s estimated that holding costs can range from $30 to $50 dollars per day. Take the average figure from that range ($40 per day) and do the math for what you spend regularly on reconditioning costs. At an average of six recon days for 40 vehicles a month, you’re looking at $9,600 per month in holding costs alone. At that rate, that’s over $115,000 per year. You can even think of this on a per vehicle basis. At that same holding cost, a vehicle that takes five extra days to recondition cuts a $3,000 gross profit into a $2,800 gross profit – all this without even factoring in the actual parts and labor costs of the reconditioning itself. Knowing these numbers will help everyone in the dealership be accountable for their role in reconditioning.
Communicate. It sounds simple, but so many reconditioning processes go bad when management, sales and service simply aren’t on the same page. Things like repair approval delays and misplaced vehicles can add days to the reconditioning process (see above for how much that costs you). Getting all your departments on the same page can help in this process. It can be as simple as creating a spreadsheet that tracks each vehicle’s progress. This way, you’ll be able to see where delays happen and quickly get your reconditioning back on the rails.
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& BHPH PERSPECTIVE BY DAVID ALGOOD
THE GROWING NEED FOR BHPH Benefits of Having a Properly Capitalized BHPH Dealership
CHART
YOUR COURSE
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The Buy Here-Pay Here business can be a great resource to build wealth for multiple generations, while also increasing cash flow to withstand the economic ups and downs of the car business. In the past several years, banks and finance companies have been very aggressive in their purchasing of secondary customer contracts. However, this trend is now changing as the subprime cycle nears its end. In 2016 alone, many subprime banks and finance companies, including Go Financial, Dealer Funding, TAG Financial, Mark One and Santander, have either substantially reduced the purchase of contracts from independent dealers or completely discontinued originations. Any dealers who have put themselves in a position to rely solely on a retail financing source, or have chosen not to seek out additional capital, must adapt quickly and prepare themselves for the future. This article will lay out the basic benefits of having a properly capitalized BHPH dealership, instead of relying on retail financing sources in these turbulent times. The aggressiveness of the subprime market caused asset backed securities to see an increase in both delinquency and losses. According to CNN Money and Subprime Analytics, there has been a rise in both low down payment and extended-term loans, as well as loans to borrowers with no FICO scores. As of February 2016, asset-backed securities saw a 34 percent increase in losses. As the performance of the securities continues to deteriorate, the coming year will see a significant tightening in the subprime sector. According to Equifax, in 2016, 23.5 percent of all new auto loans were subprime borrowers, many of which were securitized. As several large players exit the independent dealer marketplace and securitization standards tighten, there will be a substantial reduction in the availability of credit in the subprime and deep subprime industry. This means that there is a huge base you should be prepared to capture as these secondary
customers come back into BHPH stores, making the business more attractive than ever for dealers. While many dealers realize there are numerous advantages to being in the BHPH business, most do not have sufficient capital to grow their portfolio as they wish. There are a couple of financial considerations that must first be understood. The days when dealers used to recapture nearly all the vehicle costs with the down payment and finance the profit are long gone. In recent years, the market has shifted dramatically with vehicle cost rising and down payments declining. According to Subprime Analytics, as of mid-year 2016, BHPH dealers have an average vehicle cost of $7,007 with a down payment of $727, leaving them with $6,280 cash in deal. Dealers have shifted to selling a newer and nicer vehicle with a lower down payment, which in turn creates a larger cash burden. This has created a significant financial barrier to enter or grow a BHPH operation. A dealer looking to enter the BHPH business will likely need between $500,000 and $3 million of working capital to fund a single lot operation doing 15-50 loans per month. For this reason nearly all BHPH dealers use a third party to fund a portion of their operation, often allowing them to lower their self-funding needs to less than $100,000. Whether you have been in the BHPH business for three generations or you are looking to start a portfolio, choosing the right capital partner who both understands the BHPH business and will provide financing to help you grow is vital to your success. The BHPH business can be extremely profitable. Many dealers are able to cover 100 percent of their credit losses with interest income, meaning they are able to make 100 percent of the markup on their car, which in many cases is $4,000-$5,000 per unit. If your store could benefit from additional sales with great margins then entering or expanding in the BHPH business may be for you. The BHPH business is an excellent choice for dealers who do not want their livelihood to be at the mercy of secondary banks. David Algood is the director of sales and marketing at AMAC, a rapidly growing finance company doing business in the Eastern half of the United States. Anyone wanting more information can contact AMAC at 704-882-7100 (ext. 7509) or visit their website at www.acemotoracceptance.com.
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AUXILIARY NEWS
LADIES AUXILIARY SCHOLARSHIP 2017 Deadline February 28
REGULATORY MATTERS BY JEFF INGRAM
FTC CHANGES USED CAR BUYER’S GUIDE Summary of Revisions
The Federal Trade Commission, on November 10, 2016, announced and released its final ruling updating and changing the Buyer’s Guide. The FTC’s process for changing the Buyer’s Guide began in December 2012, when it sought public comments on proposed changes as a part of its systematic review of all of the agency’s rules and guides. The FTC, and many of its supporters, felt the designation of simply “as is” caused confusion for car buyers who could not understand why they had limited rights when a vehicle they purchased began experiencing problems shortly after purchase. This final ruling issued by the FTC, effective January 27, 2017, has expanded the language that must be included on the Buyer’s Guide in an effort to educate used car buyers. A summary of the revisions set forth by the FTC in its final rule: 1. Changing the description of an “as is” sale, the new version of the Buyer’s Guide must state: • As is - no dealer warranty. • The dealer does not provide any warranty for any repairs after sale. 2. Broader disclosures regarding warranties: The new Buyer’s Guide will have boxes the dealership must check to indicate whether the vehicle is covered by a third-party warranty and whether a service contract may be available. It also will include a box a dealership can check to indicate an unexpired manufacturer’s warranty applies. The dealership must check all applicable warranty boxes that are to be listed on the new Buyer’s Guide, which is to include sections entitled “Dealer Warranty” and “Non-Dealer Warranties for This Vehicle.” 3. Highlighting airbags and catalytic converters as potential major defects: “Airbags” is added as a category and “catalytic converters” is added under the category entitled “Exhaust System” on the backside of the form discussing potential major defects in used vehicles.
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4. Referring customers to government websites: At the bottom of the form, a statement has been added that directs consumers to obtain a vehicle history report and to check for open recalls. The new form asks consumers to visit www. ftc.gov/usedcars for information on how to obtain a vehicle history report and to visit www.safercar.gov to check for open safety recalls. 5. Referring customers to Spanish language disclosures: The new Englishlanguage Buyer’s Guide adds a statement at the bottom in Spanish advising Spanishspeaking consumers to ask for the Buyer’s Guide in Spanish if the dealer is conducting the sale in Spanish. This new Buyer’s Guide can be found and downloaded for use on the FTC’s website: https://www.ftc.gov/tips-advice/businesscenter/selected-industries/automobiles. What does this mean for an Alabama dealer? This final rule is effective January 27, 2017. The FTC’s final rule does provide, however, that a dealer may use remaining stocks of the old version of the Buyer’s Guide for up to one year after the effective date (January 27, 2018). You should make sure to obtain this new Buyer’s Guide form and begin implementing it on any and all inventory received after the effective date of the FTC’s final rule. If you choose, however, to use your existing stock of the older version of the Buyer’s Guide and a non-dealer warranty applies to the vehicle, you should add the following, as applicable, below the “Full/Limited Warranty” disclosure: “Manufacturer’s Warranty still applies. The manufacturer’s original warranty has not expired on the vehicle”; or “Manufacturer’s Used Vehicle Warranty Applies”; or “Other Used Vehicle Warranty Applies”; followed by the statement “Ask the dealer for a copy of the warranty document and an explanation of warranty coverage, exclusions and repair obligations.” Consumer protection laws across the country have and are continuing to strengthen. Dealers need to protect their businesses by assuring their forms comply with the law. It is important to ensure your Buyer’s Guide is up to date and you comply with the Used Car Rule, as dealers who violate the rule may be subject to penalties of up to $40,000 per violation.
I hope everyone had a Merry Christmas and Happy New Year! It is that time of year again: We are accepting applications for our scholarship award. The ladies auxiliary has been giving this honorable scholarship for over 10 years, and we are excited to continue rewarding young men and women for their academic achievements. A few things to remember: You must, of course, be a senior in high school and a child or grandchild of an AIADA member. You may contact Judy Benton at the association office (205-942-1000 or judypbenton@ gmail.com) for a copy of the application. The deadline is February 28, 2017. Get those applications submitted! As always, thank you to all of our members and vendors for helping us make this possible. Sincerely, Sherri McFarland Ladies Auxiliary Secretary/Treasurer
INDUSTRY NEWS BY USED CAR NEWS
GWC DONATES TOYS
Benefitted Families of Hospitalized Children
GWC Warranty recently completed a toy drive to benefit the annual toy shop at Geisinger Health System’s Janet Weis Children’s Hospital in Pennsylvania. Thanks to toy and monetary donations from GWC Warranty employees across the country, on Dec.13, GWC donated hundreds of toys and more than $1,000 to help families of hospitalized children shop for holiday gifts. The toy drive donation caps off a charitable year for GWC Warranty in which employees contributed to a Christmas in July Food Drive sponsored by the United Way of Wyoming Valley and a school supply drive to benefit Wilkes-Barre’s St. Vincent de Paul Kitchen. The company also sponsored two trucks as part of the Commission on Economic Opportunity’s Food 4 Kids Summer Program, which supplies summertime meals for children who do not receive the same nutritional support that they do during the school year.
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REGULATORY UPDATE BY AUTOMOTIVE NEWS
U.S. PROPOSES V2V MANDATE TO AVERT CRASHES Technology has Significant Safety Potential
U.S. auto safety regulators proposed requiring all new vehicles to be equipped with vehicle-to-vehicle communication
systems, citing the technology’s significant potential to reduce crashes. The proposed mandate, recently released by the Department of Transportation, would require all new cars and light trucks to have dedicated short-range communication systems that transmit and receive basic messages about the vehicles’ speed, location, braking and other data. DSRC systems allow cars to “talk” to other vehicles on the road and to infrastructure equipped with the systems, allowing drivers to “see” around corners and be warned of a potential crash. “This technology has enormous safety potential to prevent hundreds of thousands of crashes and save lives,” transportation
secretary Anthony Foxx said. Under the proposal, automakers would be required to equip half of all new cars with the technology two years after the National Highway Traffic Safety Administration issues a final rule. Full penetration would be required within four years after the rule is final. U.S. officials have said the technology could potentially reduce non-impaired traffic crashes by 80 percent once fully deployed. Regulators signaled their intent to mandate V2V systems in August 2014. Under this most recent proposal, the DSRC systems would be required to use a common set of communications protocols to ensure all vehicles “speak the same language,” the DOT said. The proposal also contemplates the technology working alongside crash avoidance technologies like automatic emergency braking to help prevent collisions. The proposed rule also has privacy and security requirements, including 128-bit encryption on vehicle data transmissions. In addition, the department said it plans to soon issue guidance on vehicle-toinfrastructure communications. Saving Lives Last year, there were 6.3 million U.S. vehicle crashes. In October, NHTSA said U.S. traffic deaths jumped 10.4 percent in the first six months of 2016. The jump followed a spike in 2015, when road deaths rose 7.2 percent to 35,092, the highest fullyear increase since 1966. The rule would not require vehicles currently on U.S. roads to be retrofitted with the technology. Foxx said owners couldn’t turn off the technology but could turn off warnings. The Alliance of Automobile Manufacturers, a trade group representing General Motors, Toyota Motor Corp., Volkswagen AG and other major automakers, noted the system is already being tested. The group said it would study the proposal. Automakers are pushing to ensure that a portion of the spectrum reserved for connected vehicles is not used by other companies for other wireless device use. The U.S. Federal Communication Commission has begun testing potential sharing options. Separately, the Federal Highway Administration plans to issue guidance for vehicle-to-infrastructure communications, which will help planners allow vehicles to “talk” to roadway infrastructure such as traffic lights. Reuters contributed to this report.
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SAVE•THE•DATE 1,670 attendees
173
exhibitor partners
NIADA’S 71st Annual Used Car Dealer Convention And Expo For 70 consecutive years, since 1946, NIADA has produced the NIADA Convention because we are committed to serving and assisting our dealers, whether you are a dealer or you do business with dealers. The convention includes dealer training, exhibitors, tremendous networking and entertaining events while maintaining our association’s time-honored traditions. However you’re connected to the industry, NIADA has something for you!
46 The Most Successful Used Car Professionals Attend This states 76%
decision makers
332
first time attendees
Convention And Expo Every Year To:
• Gain critical training • Face-to-face interactions that drive new ideas and build connections • Receive updates on federal, regulatory and compliance issues that affect you • Share best practices • Learn about the most current technologies, products and services offered by our top-notch exhibitor partners to accelerate your dealership ahead of the competition
&
Featuring
• BHPH Training • Compliance Training • Retail Operations Training
• Early Registration Rate $549 per person ($599 after May 11)
Who Attended In 2016:
• 1,670 Attendees • 173 Exhibitor Partners • 46 States represented, as well as Grenada and Canada • 76% of dealer attendees are owners, principals or general managers, in other words, decision makers!
• 332 First time attendees
THE MIRAGE•L AS VEGAS•JUNE 12-15
SAFETY WATCH
INDUSTRY NEWS
GWC WARRANTY WELCOMES NEW DEALER CONSULTANT TO ALABAMA Chuck Riley
GWC Warranty, provider of used vehicle service contracts and related finance and insurance products sold through automotive dealers, is proud to announce the arrival of a new dealer consultant in the Birmingham area – Chuck Riley. With Riley’s presence in the market, used car dealers in Alabama now have a dedicated resource to help them sell more cars with the
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assistance of GWC’s service, products, training and technology. Riley, a 1997 graduate of Bowling Green State University, joins GWC Warranty with more than 13 years of experience in sales and sales management. Riley’s track record of outstanding customer service is a natural fit for GWC Warranty, where every employee is dedicated to providing best-inclass service to dealers and end customers that helps avoid post-sale dissatisfaction and protects dealers’ reputations. Since 1995, GWC Warranty has helped protect more than 1.5 million drivers from costly, unexpected out-of-pocket repair bills by paying more than $400 million in claims to date. This longstanding record of excellence has earned GWC an A+ rating from the Better Business Bureau and designation as a Motor Trend® Recommended Best Buy for Independent Dealers. In addition to these honors, in 2016, GWC Warranty was again named a Bronze Level Corporate Partner of the NIADA, recognized in SubPrime Auto Finance News’ SubPrime 125 and honored as part of Auto Remarketing’s Power 300. Alan Ram is president of Proactive Training Solutions. This article originally appeared on NCM’s Up to Speed blog (blog.ncminstitute.com) and is reprinted with permission.
FORD RECALLS SEDANS FOR SEAT BELTS
May Fail to Properly Restrain Ford Motor Co. is recalling 603,392 model year 2013-16 Ford Fusion vehicles manufactured Nov. 2, 2012, to July 31, 2014, and 2013-15 Lincoln MKZ vehicles manufactured Nov. 14, 2012, to July 31, 2014. In the event of a crash, heat from the deployment of a seat belt pretensioner may cause a front seat belt anchor cable to fail. If the driver or front passenger seatbelt cables cannot properly restrain the front seat occupants, they would be at an increased risk of injury. Ford will notify owners, and dealers will apply a protective coating to the seat belt cable, free of charge. Remedy parts are expected to be available by the second quarter of 2017. Ford’s number for this recall is 16S42.
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MANAGEMENT MATTERS BY ALISHA STEWART
EMBRACING THE #HASHTAG GENERATION
How to Retain Talented Millennials in the Workplace
Millennials get a bad rap. We’re called loud and opinionated, lazy and entitled… the list goes on. And employers seem wary of hiring us, especially given reports about our low loyalty, making it hard to find the right job. As a millennial employee, I have experienced the backlash of these assumptions, but I think a lot of our negative press misses the point: Our opinions may challenge your dealership, but we want to bring our passion for change and innovation to the workplace! And it’s going to happen. The truth is that we are the future of business, and by 2020 millennials will make up 50 percent of the world’s workforce. Here are a few suggestions to help your dealership retain your talented millennial employees and embrace the cutting-edge ideas that they bring with them. Pay us fairly and give us room to grow. Fair pay and growth opportunities are paramount to the retention of millennials. As a group, we expect to progress in your company – and achieve leadership roles –
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faster than Gen X or older groups. When we don’t achieve this, we leave. A business’s failure to offer advancement results in costly and constant turnover. While it may seem easy to take the cheaper route, there are many employers out there who will provide fair compensation and a clear career path, and millennials are eager to find them. Embrace social media in all aspects of business. We all know millennials live their lives online. Whether you’re looking to hire or looking to engage, I can’t stress enough the use of online tools that are available to you, and 99 percent of them are free! Let your employees write for the company newsletter or blog. Use LinkedIn and Indeed to recruit talent. Post employee recognition or business events on Twitter, Facebook, and Instagram. Other ideas include purchasing a custom Snapchat filter for company parties and hosting a weekly vlog on YouTube. The options are truly endless, and they all help your millennial employee feel engaged with your dealership! Allow us to use our voice. I’d say millennials have a deep desire or, more appropriately, a need to let our voice be heard and share our views. Why do you think we’re so active on social media? A few ways to encourage that: • Give us opportunities to lead in roles that bring active change to the company, such as seats on committees and inclusion in forums. • Listen to us and be open to ideas! Just
because something has been done a certain way for an extended amount of time does not mean it is the most effective or efficient way to keep doing things. Use our creativity to advance your business. • Allow us to be creative by embracing technology. • Let us be involved. Here at NCM, we have an Ownership Culture Committee that not only plans social events for the company but also participates in charity and giving back. Believe it or not, millennials do care about things bigger than themselves. Allowing them to give back and get involved will reap huge rewards in employee morale and culture. Alisha Stewart began her career at NCM Associates in September 2015. She graduated from California Baptist University in 2010 with a Bachelor of Arts degree in Communications and Public Relations. This article originally appeared on NCM’s Up to Speed blog (blog. ncminstitute.com) and is reprinted with permission.
February/March 2017 AIADA
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AIADA FORMS
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AUCTION DIRECTORY
SHIPPING CHARGES ABC – ATLANTA 444 Joe Frank Harris Parkway Cartersville, GA 30120 Sale every Tuesday 6 p.m. & Friday 11 a.m. Phone: (770) 382-1010
GREATER NEW ORLEANS AUTO AUCTION 61077 St. Tammany Ave. Slidell, LA 70460 Sale every Wednesday 9:30 a.m. Phone: (504) 643-2061
ABC BIRMINGHAM 1046 A.E. Moore Drive Moody, AL 35004 Sale every Wednesday 12:30 p.m. Inops at 12 pm Phone: (205) 640-4040
HIGHWAY 101 DEALERS AUTO AUCTION 2100 Hwy. 101 Rogersville, Al (256) 247-3600 Sale Day – Thursday 10:30 a.m.
ADESA ATLANTA AUTO AUCTION 5055 Oakley Industrial Blvd. Fairbum, GA 30213 Sale every Wednesday 8:30 a.m. Phone: (770) 357-2277
KELLEY AUTO AUCTION 3485 US Hwy. 431 Attalla, AL 35954 Sale every Tuesday night Phone: (256) 538-9095
ADESA OF BIRMINGHAM 804 Sollie Dr. Moody, AL 35004 Sale every Monday 6:30 p.m. & Wednesday 9 a.m. Phone: (205) 640-1010
LONG BEACH AUTO AUCTION, INC. 8494 County Farm Rd. Long Beach, MS 39560 Sale every Wednesday 3 p.m. Phone: (228) 452-2030
ADESA KNOXVILLE 1011 Adesa Pkwy Lenoir City, TN 37771 Sale every Tuesday 6:30 p.m. & Friday 9:30 a.m. Phone: (865) 988-8000
LOUISIANA’S 1ST CHOICE AUTO AUCTION 18310 Woodscale Rd. Hammond, LA 70401 Sale every Tuesday 8:30 a.m. Phone: (985) 345-3302
ADESA OF MEMPHIS 5400 Getwell Rd. Memphis, TN 38118 Sale every Tuesday 9 a.m. Phone: (901) 365-6300
MANHEIM CENTRAL FLORIDA 9800 Bachman Rd. Orlando, FL 32824 Sale every Wednesday 9 a.m. Phone: (407) 438-1000
ALBANY AUTO AUCTION 1421 Liberty Expressway SE Albany, GA 31702 Sale every Thursday 6:30 p.m. Phone: (229) 435-7709
MANHEIM NASHVILLE 8400 Eastgate Blvd. Mt. Juliet, TN 37122 Ford Factory Sale every other Monday 11 a.m. Open Sale every Wednesday 9 a.m. GM Factory Sale every other Thursday 10 a.m. Nissan Factory Sale once per month Friday 9 a.m. Phone: (615) 773-3800
ATLANTA AUTO AUCTION 4900 Buffington Rd. Red Oak, GA 30272 Sale every Thursday 9 a.m. Phone: (404) 762-9211 AUTO AUCTION OF MONTGOMERY 6142 Troy Highway Pike Road, AL 36064 Sale: every Thursday 10:00 a.m. Phone: (334) 288-3399 BAMA AUTO AUCTION 4103 Gault Avenue South Ft. Payne, AL 35967 Sale: every Thursday 6:00 p.m. Phone: (256) 304-0947 BIRMINGHAM AUTO AUCTION 125 Meadland Circle Birmingham, AL 35023 Sale every Thursday 6 p.m. Phone: (205) 744-4030 CENTER POINT AUTO AUCTION 100 13th Ct. NE Birmingham, AL 35215 Sale every Monday 6 p.m. Phone: (205) 856-6527 CHATTANOOGA AUTO AUCTION Chattanooga Auto Auction, Public Sale every Tuesday @ 6:30 PM, Dealer Sale Thursday @ 10:00 AM and IN-OP sale begins 9:00 on Thursdays DEALERS AUTO AUCTION OF HUNTSVILLE 26125 Hwy 72 Athens, AL 35613 Sale every Tuesday 9:30 a.m. Phone: (256) 232-0201 DEANCO AUTO AUCTION 3664 South Oates St. Dothan, AL 36301 Sale every Wednesday 10 a.m. Phone: (334) 792-1116 GEORGIA-CAROLINA AUTO AUCTION 884 E. Ridgeway Rd. Commerce, GA 30529 Sale every Wednesday 3 p.m. & Friday 6 p.m. Phone: (706) 335-5300
MANHEIM MISSISSIPPI 7510 US Hwy. 49 N Hattiesburg, MS 39402 Sale every Monday 5 p.m. & Thursday 9 a.m. Phone: (601) 268-7550 MANHEIM METRO ATLANTA 2244 Metropolitan Pkwy SW Atlanta, GA 30315 Sale every Tuesday noon Phone: (404) 767-3652 MIDFIELD CAR AUCTION 1468 Hartman Industrial Blvd. Midfield, AL 35228 Sale every Wednesday and Saturday-6:30 p.m. Phone: 205-923-6535 PENSACOLA AUTO AUCTION 401 West Burgess Rd. Pensacola, FL 32503 Sale every Thursday 9:30 a.m. Phone: (850) 477-3063 SHOALS NORTH ALABAMA AUTO AUCTION 651 Fairground Road Muscle Shoals, AL (256) 381-2745 Sale every Tuesday night @ 6:30 p.m. SOUTH ALABAMA AUTO AUCTION LLC 27472 Wilcox Road Robertsdale, Al 251-964-7012 Sale Days – Tuesday & Thursday 6:30 p.m. Sat. Auction @ 11 a.m. YOUR AUCTION 3010 Scherer Dr. N St. Petersburg, FL 33716 Sale every other Tuesday 11 a.m. – Birmingham The Jim Burke Automotive Group Phone: (800) 675-4444
GEORGIA DEALERS’ AUTO AUCTION 7205 Campbellton Rd. Atlanta, GA 30331 Sale every Tuesday 10 a.m. Phone: (404) 349-5555
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February/March 2017 AIADA
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MANAGEMENT MATTERS BY GEORGE GOWEN
THE IMPORTANCE OF VALUE Unveil the Value of Service and Parts
We all know a customer will buy a product or service when the value exceeds price. Unfortunately, automotive dealerships hide the value that the service and parts departments bring. Here’s how you can change that. Recognize the value of “free.” Grocery stores commonly show the customer how much they “saved” on every receipt. That builds additional value to the price they paid for groceries. For some reason, dealerships comp services but, unlike the grocery store, never let anyone know about it. Here’s an example: Almost every dealership I know requires a multi-point inspection (MPI) for each repair order. This check builds trust and helps sell needed services. But what is the “value” to the customer for that service? None. However, if you show on the repair order that the MPI has a $49$149 value that we provided at “no charge,”
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it does means something. After all, the service has actual value, and we should let customers know it. Here’s another example. Many dealerships charge a diagnostic fee, using the information to explain the nature of the problem and how much the repair will cost. Along with the diagnostic work, you probably do a complete inspection of the entire vehicle and don’t charge for it. You should mention this value to your customer. Always offer a deal. While we’re looking at other industries for inspiration, let’s consider restaurants. I’ve been to many establishments that promote a special that includes the appetizer, salad, entrée and dessert. You’re told that you’ll get a special value by ordering the components as a group versus ordering them individually. The reality is that people will take advantage of the “deal” even though they likely would not have ordered all the items separately. You can apply the same principle to service menu items. The best performers on menu sale penetration show the value of the combined services versus doing those services individually. But if you offer a “30k Service” for $400 without explaining the value of the individual services, all they will see is the $400.
Imagine the penetration level if you showed that all the services in the “30K Service” would separately cost $530! If the menu item is “only $400,” the customer just saved $130 by purchasing it. The same advice goes if you provide a car wash, loaner cars, or any other services: Always make sure the customer knows the value. And, no matter what, make sure the value you provide exceeds the price. This article originally appeared on NCM’s Up to Speed blog (blog.ncminstitute.com) and is reprinted with permission.
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